Huck Corporation is looking to purchase a truck costing $49,000 by agreeing to make payments every three months for the next two years; the first payment is due three months after the purchase date.Huck's incremental borrowing rate is 8%.How much will each of the payments be?
A)$6,248
B)$6,689
C)$8,527
D)$5,709

Question

Quizplus · Accepted Answer

The annual payment ($6,689) is equal to the amount financed ($49,000) divided by the present value of a 2%, 8-period ordinary annuity factor (7.3255).

Huck Corporation Is Looking to Purchase a Truck Costing $49,000